Looking Back and Thinking Forward: Community Reinvestment Act at 40
On June 28th, 2018, UNHP hosted a well-attended forum on the 40th anniversary of the passage of the Community Reinvestment Act (CRA) as bank regulators consider a regulatory revision. The Forum provided information about the CRA’s past and present relevance to the Bronx and to New York City at large, with the goal of laying the groundwork for organizing and implementation efforts around expected changes to this imperfect but also crucially important reinvestment tool. This context included detail about the history of redlining, the effectiveness of past Bronx community organizing and reinvestment efforts, and present-day gaps in financial services in the borough.
UNHP’s CRA Forum was attended by 60 people from a range of organizations including banks, non-profit groups, public agencies, community residents, and affordable housing providers. Attendees enjoyed a light breakfast prior to the UNHP opening presentation about the demographics and banking trends in the northwest Bronx. Panels members shared information about the history of redlining, the impact of the CRA, proposed changes to the CRA and the gaps in financial services in the Bronx today.
The panel members on the Forum brought a wide range of expertise to the discussion, and included: William Frey, former Bronx community organizer and now senior advisor with Enterprise Community Partners; Gregory Jost, organizing director of Banana Kelly who is researching the history of redlining for an upcoming book; Jaime Weisberg, Senior Campaign Analyst from ANHD; and Jumelia Abrahamson, Director of the UNHP’s Northwest Bronx Resource Center.
John Garcia, UNHP Board member and Executive Director of Fordham Bedford Community Services, moderated the panel and welcomed the audience to the Forum, and more specifically to the Serviam Campus – a Fordham Bedford Housing Corporation collaborative development initiative with the Ursuline religious community. Serviam includes 554 affordable housing units in 5 buildings, four of which are exclusively for low-income senior citizens.
The Forum was held in the theater and community room at Serviam Gardens, one of the five affordable housing buildings located on the Serviam Campus, a collaborative initiative between Fordham Bedford Housing Corporation and the Ursuline Religious Community. The photos above were taken from the rooftop of Serviam Gardens and show the newly opened (left) Serviam Heights, a low-income senior building and FBHC Executive Director John Reilly (right)showing off the next phase of the Serviam Campus under construction. Fordham Bedford’s community-based development also has its roots in the NWBCCC organizing movement that fought redlining and disinvestment by the private and public sector.
Panelists and Presenters; UNHP Executive Director, Jim Buckley, UNHP Intern Caroline Kirk, Banana Kelly’s Gregory Jost, ANHD’s Jaime Weisberg, former Bronx organizer Bill Frey of Enterprise, NWBRC Director Jumelia Abrahamson, Moderator John Garcia and UNHP’s Data and Community Researcher, Jacob Udell.
UNHP’s Jacob Udell and Caroline Kirk opened the event with an overview of recent trends in the northwest Bronx neighborhoods served by UNHP. They shared data and maps of the Bronx and New York City, and focused on changes in demographic trends, increases in severe rent burden, and the persistence of alternative financial services (pawn shops, check-cashers etc.) and under-banked populations.
This Bronx zip code map highlights the low number of bank branches as compared to Alternate Financial Services (AFS), such as check cashers, and pawn shops. The Bronx has the lowest concentration of bank branches per household of any county in the United States.
Gregory Jost was the first panelist to present and provided the audience with an overview of redlining and its effects on the Bronx. Importantly, Greg emphasized that redlining – or the discriminatory practice of refusing to offer mortgages based within specific geographic areas – occurred not necessarily in neighborhoods with high concentrations of people of color, but rather in neighborhoods where there was perceived risk of ‘infiltration’ of Black or Hispanic homeowners. This practice not only deepened racial wealth gaps that existed in the Bronx and elsewhere but upheld patterns of segregation on the theory that home values were only stable if a neighborhood remained White. The CRA – passed to end the practice of redlining – did not explicitly address those racial disparities; it did de facto begin to undermine the notion that it was a financial necessity for banks to freeze people of color out of the home mortgage lending market.
Developed by Greg Jost and Designing the We as part of the ‘Undesign the Redline’ project, this visual layers descriptions of the important mechanisms of redlining – including contract buying, urban renewal, and speculation – on top of an actual ‘redlined’ map of the Bronx.
Greg was followed by Bill Frey, who discussed how Northwest Bronx Community and Clergy Coalition (NWBCCC) community organizers worked with neighborhood residents to utilize the CRA and goad the banks into reinvestment. Bill described the challenges of working with tenants and helping to draw the connection between the lack of building financing and its impact on housing conditions. Organizers were able to form a strong Reinvestment Committee of neighborhood residents, homeowners and renters to demand investment from banks. The newly passed CRA got the banks to the table and to community meetings. Neighborhood leaders demanded that banks enforce the “good repair clause” on properties for which they held the mortgage. CRA became a tool to improve housing and bring private financing back into the neighborhood.
Neighborhood leaders and NWBCCC Reinvestment staff gather in the late ‘70’s to celebrate Citibank’s decision to renew their lease for their branch on East 198th Street. The small branch remains open today on East 198th Street and is an important banking presence for seniors and others who live in the Fordham Bedford area. The 1977 CRA Act empowered residents to demand that banks provide banking services and reinvest in the communities where they collected deposits. On the right, NWBCCC organizer Bill Frey (back to the camera) encourages neighborhood residents as they picket the old Dollar Savings Bank branch near Fordham Road to urge the banks to “Put our money back” into the neighborhood in loans and mortgages.
Bill also discussed the shift in multifamily lending in the Bronx over the 40 years of the CRA. During his time organizing with the NWBCCC, the primary issue was under-financing; banks, in other words, were unwilling to provide the lending needed to create affordable housing solutions. Currently, the issue of over-financing is also relevant. In multifamily lending particularly, the Bronx is experiencing investment that is not based on the net income of the property, but on the potential resale value of the building. The result has negative consequences for Bronx tenants and residents. Bill’s point raises the question of how CRA should impact the lending practices of banks on the acquisition and renovation of multifamily housing.
Jaime Weisberg, Senior Campaign Analyst from ANHD, stressed the deep respect that she and others have for the Community Reinvestment Act and its impact, with its trillions of dollars leveraged, and billions of dollars of investment in NYC affordable housing and the creation of affordable financial products. With that, Jaime also described the areas in which it might be possible to not only preserve but also strengthen the CRA, and offered some suggestions leading up to the expected changes to the way the CRA is administered. Jaime argued that the CRA should cover more institutions, specifically non-bank mortgage lenders that are not bank subsidiaries, and the tools to measure the impact CRA lending – particularly the Home Mortgage Disclosure Act (HMDA) – should also be expanded. She pointed out that HMDA data allows certain types of loans to be exempted from reporting (CEMA, CMBS), and also exempts banks that originate less than a certain number of 1-4 family mortgages from any reporting requirements. Jaime also discussed the need to evaluate the contours of the CRA exam, which approximately 98% of banks pass, as well as the ability to ‘double-downgrade’ banks that score poorly enough, as currently regulators are restricted to downgrading banks only one level at a time. Finally, Jaime challenged the audience to think about whether the CRA should allow regulators to censure banks that lend to multifamily property owners with a history of harassment or displacement.
Jumelia Abrahamson provided some on-the-ground context of the financial services needs of low and moderate income Bronx residents today. Jumelia is the Director of the Northwest Bronx Resource Center, a UNHP collaborative initiative with six other successful non-profits to provide direct financial and affordable housing services to neighborhood residents. Last year the NWBRC served over 3,000 Bronxites through a wide range of interconnecting free services including financial counseling, free tax preparation, eviction prevention and enrollment in the NYC affordable housing lottery. Jumelia shared a map of Bronx bank branches – 38 banks have only one Bronx branch. The branch is the point of access to financial services for low-income and immigrant Bronx residents. While some banks have affordable products, multi-lingual staff, and low fees, the lack of additional branches and accessible surcharge-free ATM’s can create barriers.
Above is a map of Bronx bank branches, The Bronx is home to 24 banks with 150 branches – 38 banks have only one Bronx branch. Chase has the most amount of bank branches at 46 but only has 5 surcharge-free ATM’s outside of the branch ATM’s. Ridgewood Savings, which only has 7 branches provides access to 100 surcharge-free ATM’s. UNHP feels both branches and surcharge-free ATM’s are important to provide low-cost financial services in the underserved Bronx. The UNHP Bronx Banking Guide offers information to Bronx residents about bank accounts, and branch locations.
No surprise here – The Bronx with its low number of bank branches has a high number of residents who are unbanked and underbanked. An underbanked person is someone with a traditional bank account who also uses check cashers and other alternative services.
Jumelia was particularly interested in highlighting creative bank partnerships and the use of surcharge-free-ATM networks as a way to create more services in the Bronx. Spring Bank, for example, only has one branch in the Bronx, but because of a partnership with Citi as well its membership in the MoneyPass ATM network, allows its customers access to surcharge-free ATMs all over the Bronx. Citi has also partnered with Neighborhood Trust Credit Union to allow NTCU members to access its branch and ATM network. While NTCU only has one physical branch in Washington Heights, this partnership allows its members in the Bronx to access financial services all over the borough. This is particularly important for UNHP clients from the Bronx who attend ‘Getting Ahead’ seminars, as these clients have access to NTCU accounts following completion of the course. Jumelia suggested that an expansion of partnerships like these and the addition of both deposits and withdrawals at surcharge-free ATM networks should be looked at and encouraged in the context of CRA examinations, as they allow for cooperation in banking to address the complex financial needs of Bronx residents.
The timeliness of the Forum and related follow-up activities are clear. With the pending announcement of new federal proposals regarding CRA, the Bronx needs to share how important a strong Community Reinvestment Act was to its comeback and how a preserved and strengthened CRA remains vital to the ongoing financial well-being of the Bronx and other lower-income communities through the US.
Financial investment data in a community was important when the Bronx was redlined and remains important today. The hand-drawn and typed charts and graphs may look crude by today’s standards, but the point was clear—banks were sharply reducing their mortgages in the Bronx and neighborhood residents could see the impact in their buildings. UNHP continues that tradition today—presenting neighborhood data in an understandable format to support people’s ability to analyze what is happening in their neighborhood and City. The typewriter and the ruler that was used to draw the graphs are on the shelf (just in case we need them in the future), but the goal of UNHP research is still the same: make information available in a form that allows people to understand what’s happening and inform their conclusions. UNHP supports the comprehensive sharing of data and complete reporting on the financial activities of both banks and non-bank mortgage lenders as regulations for the CRA are considered.